Zen millionaires: boomer vs. GenXer

Dr.Paul B. Farrell

LOS ANGELES (CBS.MW) -- Here's a couple of truly inspiring stories about two very, very different Zen Millionaires.

One is a very conservative 42-year-old worth $250,000 with plans to actually have a million bucks by age 58. His passion? Cycling. The other is a 24-year-old GenXer who's already worth $2 million. His passion? Gambling on big, big risks as an entrepreneur. So different, yet so very much alike.Which are you?

Adam is a boomer who prefers bicycles to BMWs. He admits he's already one of our new Zen Millionaires club: "After reading your article, Zen Millionaires don't drive BMWs and your request for potential members to write, I decided to share how it's worked for me.

- Zen Millionaire without big income: "It always amazes me when the financial magazines tout retirement savings and then profile some person earning 6 figures who saves 20 grand for retirement. They ought to profile someone like me who doesn't make a lot of money, yet still manages to invest heavily for retirement.

- Builds a solid $250,000 portfolio of funds: "First some background. I just turned 42. I have squirreled away approximately $250,000 for retirement spread between 11 mutual funds. They include the following:

- Making a rather modest salary: "I currently earn a little over $40,000 per year, which is the most I've ever made. I am single, have never married and have no children. Education is important. I have a couple of masters degrees in architecture and urban planning and work as a planner in a small township in the Rockies, in ski country.

- Still saves almost half of income: "Last year I invested approximately $18,500 from my wages and employer matching funds, about 44 percent of my income.

- Pays cash, no debt & proud of it: "I have only had 3 vehicles in my lifetime (never a BMW!). I currently own a 1996 Toyota 4-Runner and bought it for $3,500 under sticker through a nationwide buying service written up in Money magazine. I paid cash for them all and drove the first two for over nine years each. I have no debt, and no truck loan payments, and am proud to say that I've only carried an outstanding credit card balance for 4 months of my entire life.

- Invests in high school, funds vs. stereo: "I first got started investing as a high school senior in the mid 70s. I purchased 100 shares in the Investment Company of America Fund (AIVSX) rather than buy a nice stereo to replace my clock radio. I invested close to $5,000 in the fund the next 5 years, with all the earnings reinvested.

- Maxed out IRA: "Since 1980 I have maxed out my IRA and had bought my first new truck for cash, even though by 1987 I was only earning $16,000 as an apprentice architect.

- Sometime bad things happen to good people: "In 1990 I had accumulated about $16,000 in my IRA, and decided to enter the mutual fund marketplace. I withdrew the money from a S&L IRA earning 8.75 percent, and on the 59th day (as the IRS allows 60 days) deposited it in the Janus Fund. I remember it well as the very next day (day 60) I awoke to news that Saddam Hussein had invaded Kuwait, and by the end of the day my fund had dropped about $2 a share. Just my luck! But I knew I was in the fund for the long haul. Fortunately, during the next year Janus Fund returned about 42 percent, and that great performance hooked me completely on stock mutual funds.

- Hit with job loss and recession: "In 1992 I got canned from my job as a planner making $28,000 and was unable to find work as a planner or architect back East as the town was hit by a recession.

- Turn life's lemons into lemonade: "So I decided to seek greener pastures by living a dream of mine: bicycling across the USA. I reasoned that it was a perfect time to go -- no wife, no kids, no job, no mortgage, no debt, and money in the bank! Besides, camping out at $2.00 a night was a lot cheaper than paying rent and looking for work that I had found nonexistent. I put all my belongings in storage, got a living will, last will and testament, power-of-attorney, and carried full coverage health insurance, and pedaled west, solo and self-contained on a bicycle packed with 70 pounds of gear. I ended up riding over 8,000 miles in 200 days across the US, up into Canada and down into Mexico. The entire trip cost $7,000, and was fully paid out of earnings from my mutual fund portfolio, which by then had grown to $32,000.

- Follows dream and go West: "I quit the ride in Phoenix on Christmas in 1992 and decided to move to the west coast where I started a small business. It failed after a few months. So I ended up at age 36 working construction as a manual laborer in Portland and Maryland for a few months before a planning job paying $30,000 opened up in the Rockies in spring of 1996.

- Meanwhile, never stopped contributing to IRA: "All the while I was contributing to my IRA, and rolling over past job retirement plans into other Janus funds. I never cashed in any retirement investments.

- Also maxed-out all my 401(k)s: "Whenever I've had the opportunity to invest in a 401(k) or government 457 plan I have always maxed it out, especially when there is any employer participation.

- What you don't see, you can't spend: "Colleagues wonder how I do it, but much like your advice, I do it all up-front and force myself to live on the balance and to live simply and frugally. I shop at CostCo and Home Depot, buy and cook in bulk and portion out individual servings.

- Follow your dreams: "My passion is cycling (I own five bikes worth about ten grand) and recreate close to home, camping, hiking and cycling in the Rocky Mountains. I enjoy exploring new places, staying at hostels and camping out even while driving.

- Always rents the American dream house: "I have always rented, primarily because I've relocated so many times. Since college I've lived and worked in Virginia, Maryland, Florida, California, Oregon, Colorado and Utah. And changed jobs often, with the longest being 3 years. I figured home ownership isn't worth the hassle until I settle down, if ever. Currently I live in a wonderful little bungalow on a big estate, with rent only $600 a month.

- Retirement is financial freedom, still working: "To be realistic, my retirement earnings have been excellent over the past few years. Much like the other people in your articles, I, too, am looking forward to 'retirement' as a chance to switch from government work to perhaps leading bicycle tours. Or if I stay single, to operating a youth hostel in my later years.

- Plans to be millionaire by age 58. "I figure that just on my current $231,000, if I make 10 percent a year I'll surpass $1 million at age 58.

- Continue frugal living in retirement: "While I'm striving to have more money set aside for retirement, and although I will continue my aggressive savings, I believe the simple lifestyle I have cultivated will not require a lot of money when I do retire, so I will continue doing what I'm doing, living frugally.

- Do what you love, says the Zen Millionaire: "One final comment. I believe it bears repeating that one of the Zen Millionaires mantras frequently mentioned in your articles is "Do What You Love and the Money Will Follow," the title of Marsha Sinetar's 1987 book. The pages of my copy are worn and dog-eared. It's underlined throughout, yet my copy gets periodic use, especially around the Christmas celebration as I re-evaluate my life and career progress, ponder my New Year's resolutions, behold my financial picture, and strive to remember the past year and what I've learned about life. Thanks for inspiring me through your writings. Adam."

You can't help but admire someone like Adam. He's a free spirit centered in doing what he loves. And at the same time he's practical enough, building a solid portfolio of $250,000, on his way to having to becoming a millionaire before he retires. It suits his personality.

GenXer becomes Zen Millionaire taking huge risks

Now here's a totally different case, yet still a Zen Millionaire in my book -- a young 24-year-old GenXer who has the same spirit as Adam, and is still grounded in financial reality that suits his personality. Jerry already has a $2 million portfolio from taking huge risks -- yet no funds!

- Quits college to create a 'Net business: "I'm going to give you some of my financial history to use as an example of what I see as a much smarter way to use extra money at my age. I quit college a couple years ago just before turning 22 and began my own Internet business.

- Sells his business for a profit at 23: "After a year, I had run out of money and patience so I sold it, getting almost enough cash to cover my debts, plus 100,000 shares stock in the company that bought me out. At that time, the price was 50¢ per share and they offered to buy it back from me for $1.00 a share. I declined. My reason? $100,000 was much more money than I'd ever seen before, but at my age the only 'sensible' investments are high-risk. I saw their company as going nowhere, so I stayed on to work with them for a few months as a consultant, and by the time I left, I felt that my investment was sound.

- Funds are a 'waste of time' for GenXers: "Diversify? The thought crossed my mind -- but why should I drag down my returns by averaging in losers? No! Find a company you're really excited about and go for it, put that money in options! If it goes down, you lose your money. If it goes up, you'll probably see a return of 100 percent or more. If your investment does go up, do it again! And again!"

Okay, okay, Jerry, I hear you, it obviously works for you. Maybe not everyone, but it sure works for you. But if you ever decide to change your mind and want a few funds that you should understand ('cause you work in the technology arena), here are a dozen of the hottest tech sector funds available today:

And another good reason for checking these funds out today (even if you don't buy them), is that you might pick up a few tips on tech stocks you might buy, after you find out what their managers are buying. Another source are the top-11 indexes of Internet, technology and new economy stocks, which we profiled earlier.

- Take big risks now, settle into funds later: "People who are putting a few hundred bucks into mutual funds each month are almost wasting their time," Jerry says. "Yes, putting small amounts into mutual funds is planning for retirement, but that's 30 years down the road. That's later. If you're resigned to working that many years anyway, why not take a year or two of your contributions and try your skills at stock-picking. If you lose, you're out nothing in the long run. If it turns out that you're good at it, you're a millionaire many times over!

- Take big risks, get real big returns: "A few months of consulting gave me $6,000 of profit after living expenses, a used truck, and paying back the balance of school loans. So I sunk it all into Microsoft
MSFT, -1.70%
options. I lost half of it before getting out. The remaining $3000 went into Intel
INTC, -1.79%
options. They doubled. Then I went into Dell
"
options which tripled. A loser here and there, usually winners.

- You 'can't lose' riding the bull market up: "In a bull market if you pay attention you can't lose in the long run. Even after the hits I took, my portfolio is worth over $150,000 in just 8 months, and I've been withdrawing huge chunks periodically to buy things, like a new truck this time around.

- Entrepreneur now a 'millionaire next door:' "The 100,000 shares? They're worth around $2 million now! And when I sell them, the money is all going to go into one stock again, on margin this time. I'm not sure which one yet.

- He'll gamble all $2 million on one roll of dice: "But one more roll of the dice and I'll be done, living lavishly on interest, plenty for friends and family. The good life.

- GenXer doing what he loves, taking big risks: "And if I lose it all? So what? I'm only 24, there are plenty of years left to work! I'll be no worse off than a year ago, and will have picked up a 'cool story' and a new truck in the meantime. Being young is about taking risks. You never know, you might even end up being good at it. Thanks, and I hope you pass this opinion along to others my age. Jerry."

Are you a 'Zen Millionaire?'

Do you have an inspiring story to tell? We'd like to hear more of your stories about this elusive Zen millionaire quality. Do you fit? Do you want to fit? After all, it's a self-initiating fraternity; You're "in" if you believe you're in. And, as you'll notice from the two stories above, Adam, a 42-year-old Boomer, and Jerry, the GenX entrepreneur, being a Zen Millionaire does not depend on how big your portfolio is. The kind of wealth we're talking about here come from within.

As M. Scott Peck put it in : "What constitutes wealth? In worldly terms, it is the possession of money and valuable things. But if we were to measure wealth in other ways, besides mere dollars, many who are poor in possessions are spiritually rich, and many who own much are spiritually impoverished."

How rich will you be in retirement? Better yet, how "rich" are you today? Are you a Zen Millionaire? Let's hear from you.

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